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In House Lawyers are the New Black

June 24, 2008 Dahna Ori News and Events  

In house lawyers are back in vogue. For the first time in years, more GCs plan to hire extra in-house lawyers than not. Indeed, just under half of all GCs surveyed (49%) in the latest Altman Weil Chief Legal Officer Survey  (2008) are planning to beef up their internal legal teams. Which is great news for corporate counsel.

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But bad news for law firms. For while in-house spending is on the way up, “out-house” spending is under the knife, and some firms are facing the bullet. Over a quarter of GCs plan to spend less on outside counsel (the highest proportion in years), and half plan to fire at least one firm (also the highest proportion in years). Ouch.

But bad news for law firms. For while in-house spending is on the way up, “out-house” spending is under the knife, and some firms are facing the bullet. Over a quarter of GCs plan to spend less on outside counsel (the highest proportion in years), and half plan to fire at least one firm (also the highest proportion in years). Ouch.

Which begs two questions: why is it happening and what can you do about it?

Fundamentally, GCs want quality work for less money, and they’ve decided that bringing work in-house is a good way to achieve that goal. The survey names cost control as the biggest shared concern over the next 3-5 years and discounted fees as the biggest factor in improving relations between law firm and law department. It’s also very clear that the most popular item of innovation amongst General Counsel is price innovation, through fixed or discounted fees.

Firms with poor quality control are the most at risk. You only need to mess up one or two critical matters to get the bullet when the cost squeeze hits the legal department.

But good quality control doesn’t necessarily mean you’ll dodge the bullet. Nor will social events, satisfaction surveys and newsletters do you much good. First, as mentioned above, firms must get creative on fees. And second, they must improve their responsiveness. Cost and speed. These are the ways to a GC’s heart.

Unfortunately for law firms, the bad news is only going to get worse. Cost and speed pressures are also driving innovation inside the law department, which strengthens the case for taking work in-house. Smart GCs are rolling out self-service systems that empower business users to create their own first draft contracts (and in some cases final draft contracts). This frees in-house counsel from repetitive transactional work, allows the law department to handle more high-value work internally, and opens to door to further savings on external legal spend.

dahna

Dahna Ori is Exari’s Digital Marketing Specialist. Reach out on twitter @ExariDahna